Question

Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on January 1, 2013. The annual reporting period ends December 31. The trial balance on January 1, 2015, follows (the amounts are rounded to thousands of dollars to simplify):   Account Titles Debit Credit   Cash $ 4   Accounts Receivable 4   Supplies 11   Land 0   Equipment 53   Accumulated Depreciation $ 7   Software 20   Accumulated Amortization 7   Accounts Payable 6   Notes Payable (short-term) 0   Salaries and Wages Payable 0   Interest Payable 0   Income Tax Payable 0   Common Stock 65   Retained Earnings 7   Service Revenue 0   Salaries and Wages Expense 0   Depreciation Expense 0   Amortization Expense 0   Income Tax Expense 0   Interest Expense 0   Supplies Expense 0      Totals $ 92 $ 92 Transactions during 2015 (summarized in thousands of dollars) follow: 1. Borrowed $13 cash on a six-month note payable dated March 1, 2015. 2. Purchased land for future building site; paid cash, $7. 3. Earned revenues for 2015, $146, including $33 on credit and $113 collected in cash. 4. Issued additional shares of stock for $2. 5. Recognized salaries and wages expense for 2015, $78 paid in cash. 6. Collected accounts receivable, $17. 7. Purchased software, $12 cash. 8. Paid accounts payable, $14. 9. Purchased supplies on account for future use, $17. 10. Signed a $30 service contract to start February 1, 2016. Data for adjusting journal entries: 11. Unrecorded amortization for the year on software, $7. 12. Supplies counted on December 31, 2015, $11. 13. Depreciation for the year on the equipment, $7. 14. Accrued interest of $2 on notes payable. 15. Salaries and wages earned but not yet paid or recorded, $13. 16. Income tax for the year was $9. It will be paid in 2016.

Set up T-accounts for the accounts on the trial balance. Enter beginning balances and post the transactions 1-10, adjusting entries 11-16, and closing entry.

Answer 1